TaxTMI 
TaxTMI 
2024 (10) TMI 1087
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....g the fact that the assessee LLP was not born in 2010 and it came into existence only on 21/12/2015 when it was registered with the ROC." 3. While in its Cross Objection, the assessee has raised the following grounds: "The Applicant files the present cross objections under section 253(4) of the Income-tax Act (the Act), in respect of the appellate order dated 31.08.2023 passed by the CIT(A), on the following amongst other grounds each of which is in the alternative and without prejudice to any other: 1. That the Ld. CIT(A) failed to appreciate that section 56(2)(x) of the Act could not have been invoked in the present case, as: a.in this case, the agreements for acquiring rights in the plot of land from Pooja Land & Investments Pvt. Ltd., though registered on 13.04.2017, were executed on 31.03.2017. That the registration on 13.04.2017 will relate back to the said date. Hence, the said section which has been inserted by the Finance Act, 2017 with effect from01.04.2017 cannot apply to transactions executed prior thereto. b. in the present case, the rights in the immovable property including symbolic possession thereof were received by the Assessee on 31.03.2017 and, hence, s....
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....essee under section 56(2)(x) of the Act. In response, the assessee submitted that the date of registration of the property was different from the date of the agreement for sale, as the assessee acquired the property under the agreement for sale entered on 27.08.2010 under which substantial payment was made to the seller. Accordingly, the assessee submitted that the stamp duty value of the property assessable as on the date of entering into the agreement for sale should be adopted instead of the value assessed as on the date of transfer (registration) of the property. The Assessing Officer ("AO") vide order dated 27.08.2021 passed under section 143(3) r/w section 144B of the Act disagreed with the submissions of the assessee on the basis that the assessee was not born in 2010 and it came into existence only on 21.12.2015 when it was registered with the Registrar of Companies ("ROC"), as such the adoption of stamp value in this case as on 2010 does not arise. The AO further held that the crucial date in the present case is the date of registration for the applicability of the provision of section 56(2)(x) of the Act. Since two immovable properties were purchased from Valentine Proper....
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....olic possession has been taken by it. I am unable to concur myself with this argument. The S.56(2)(x) is categorical in as much as it provides for a specific mechanism where the date of agreement and date of registration are different. it clearly states that if they are not the same, the stamp duty value on the date of agreement has to be taken into account. The logical corollary is that the date of registration has to be considered for the purpose of applying S.56(2)(x). The decision of Hon'ble Apex Court in 340 ITR 1, Suraj Lamp & Industries (P) Ltd. vs State of Haryana, relied upon by the AO is clearly applicable as otherwise the appellant would not have got valid full rights. Although accounting entries are not conclusive in nature, the very fact that the appellant has not accounted for such a purchase in its books of accounts is enough indicator to negate the claim of the appellant that it had taken symbolic possession on 31.03.2017. What else can explain the fact that the appellant has not accounted for the transaction in its books for the year ended 31.03.2017? A perusal of the extracts of the ITR / financials of AY 2017-18 do not indicate that this transaction was ever ....
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....payments were made by Romell Real Estate Pvt. Ltd. to the sellers for these properties in the year 2010. Subsequently, Romell Real Estate Pvt. Ltd. through one of its 100% subsidiaries, i.e. the assessee, acquired the properties from Pooja Land &Premises Pvt. Ltd. and Valentine Properties Pvt. Ltd. and it was agreed that the sum already paid by Romell Real Estate Pvt. Ltd. shall be considered as advance payment of full and final consideration payable to the vendor for the sale of the said property in favour of the assessee. It is evident from the deed of conveyance forming part of the paper book from pages 480-508 that the said deed was executed on 31.03.2017. We further find that the said deed of conveyance was registered on 13.04.2017. Before the execution, the documents were also submitted for adjudication before the Stamp Duty Authority and the stamp duty determined to be payable was paid by the assessee on 24.03.2017. Thus, it is the plea of the assessee that at the time of execution of the deed of conveyance on 31.03.2017, an adjudication order by the Stamp Duty Authority had come and the additional stamp duty was also paid and possession was also taken symbolically. Therefor....
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....t consideration or for consideration, the stamp duty value of such property exceeding such consideration shall be considered as its income from other sources, if the amount of such excess is more than the amount mentioned in the section. In the present case, the assessee has challenged the very applicability of the provisions of section 56(2)(x) of the Act on the basis that the property was received prior to 01.04.2017. In this regard, much emphasis has been placed on the fact that the deed of conveyance and other formalities such as payment of stamp duty and handingover of the symbolic possession were completed on 31.03.2017. As per the assessee, the Registration Act, 1908 requires lodging the document for registration within four months from the date of execution. Accordingly, as per the assessee, the registration of the deed of conveyance was done in the month of April 2017, i.e., within the time permitted for registration. In order to decide this dispute, at this stage it is also relevant to determine the date from which the deed of conveyance is operative. The answer to the aforesaid query is relevant as if it is decided that the same is operative from the date of execution, i....
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...., it would have operated from the date of its execution. 7. Now, we come to the decision of the Constitution Bench in the case of Ram Saran Lall (Supra). In paragraph 8 of the judgment, the Constitution Bench held thus: "8. We do not think that the learned Attorney- General's contention is well founded. We will assume that the learned Attorney-General's construction of the instrument of sale that the property was intended to pass under it on the date of the instrument is correct. Section 47 of the Registration Act does not, however, say when a sale would be deemed to be complete. It only permits a document when registered, to operate from a certain date which may be earlier than the date when it was registered. The object of this section is to decide which of two or more registered instruments in respect of the same property is to have effect. The section applies to a document only after it has been registered. It has nothing to do with the completion of the registration and therefore nothing to do with the completion of a sale when the instrument is one of sale. A sale which is admittedly not completed until the registration of the instrument of sale is completed, cann....
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....The decision of the Constitution Bench only deals with the question of when the sale is complete; it does not deal with the issue of the date from which the sale deed would operate. Section 47 of the Registration Act does not deal with the completion of the sale; it only lays down the time from which a registered document would operate. 11. Now, coming to the facts of this case, the consideration was entirely paid on the date of the execution of the sale deed. The sale deed was registered with the interpolation made about the description/area of the property sold. The first defendant admittedly made the said interpolation after it was executed but before it was registered. In terms of Section 47 of the Registration Act, a registered sale deed where entire consideration is paid would operate from the date of its execution. Thus, the sale deed as originally executed will operate. The corrections unilaterally made by the first defendant after the execution of the sale deed without the knowledge and consent of the purchaser will have to be ignored. Only if such changes would have been made with the consent of the original plaintiff, the same could relate back to the date of the execu....
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....present case, the impugned addition made by the AO was deleted by the learned CIT(A) having regard to the 1st and 2nd proviso to section 56(2)(x)(b) of the Act, however, these provisos nowhere provides that the agreement for sale shall be operative from the date of registration and not from the date of agreement. Thus, we find no merits in the aforesaid submission of the learned DR. 14. During the hearing, the learned DR also placed reliance on the decision of the Hon'ble Supreme Court in Suraj Lamp and Industries Pvt. Ltd. (supra) to support the contention that the registered deed of conveyance is the only mode of legal transfer of immovable property. From the perusal of the aforesaid decision of the Hon'ble Supreme Court, we find that the issue under consideration before the Hon'ble Supreme Court was whether an immovable property can be sold by executing a general power of attorney. Answering the issue in negative the Hon'ble Supreme Court held that a general power of attorney does not convey any title nor create any interest in an immovable property and therefore an immovable property can be legally and lawfully transferred or conveyed only by registered deed of conveyance. Fro....